Secret To Maine's Touted High-Risk Pool? Enough Money

The Maine Legislature established a high-risk pool for insuring patients with expensive medical conditions, partly funded with a surcharge on all policyholders in the state.

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Originally published on May 23, 2017 11:18 pm

As the GOP health bill moves to the U.S. Senate, many consumers and lawmakers worry that people who have pre-existing conditions won't be able to find affordable health coverage if the bill becomes law.

There are a number of strategies under consideration, but one option touted by House Republicans borrows an idea that Maine used several years ago. It's called an invisible high-risk pool — "invisible" because people in Maine didn't even know when they were in it.

The program existed from 2012 until 2014, closing with the advent of the Affordable Care Act's insurance exchanges.

The Maine pool earned higher marks than most state high risk pools because it had a key ingredient: enough money.

"The problem is that in order to do the Maine model — which I've heard many House people say that is what they're aiming for — it would take $15 billion in the first year and that is not in the House bill," Sen. Susan Collins, R-Maine, told Politico. "There is actually $3 billion specifically designated for high-risk pools in the first year."

Maine's program worked like this: When a resident applied for health insurance, they had to fill out a questionnaire. If they had certain medical conditions known to be costly, their application was flagged for the high-risk pool. To consumers, it was seamless. They paid regular premiums and got the same sort of coverage as any other enrollee in their chosen health plan.

The money to pay for these high-cost patients came from two sources: the insurance policy premiums paid by patients within that high-risk pool, and a $4-a-month surcharge on all policyholders in the state.

This invisible high-risk pool was just one part of a larger health reform law in Maine, Stein says, and that makes a straight-up assessment of how well the strategy worked difficult. But it's "a great theory," he says, "and can be an appropriate way to handle these things."

Eric Cioppa, superintendent of Maine's Bureau of Insurance, agrees with Stein. "In Maine, for the period of time it was operating, it worked very well," Cioppa says.

Though only in effect for a brief period, Cioppa says, the invisible high-risk pool did keep costs down in the individual market, where Anthem was the largest insurer.

Without the invisible high risk pool, Cioppa says, Anthem would, by its own estimates, have increased rates more than 20 percent. Instead, the rates went up less than 2 percent.

But Steve Butterfield, policy director of the Maine-based advocacy group Consumers for Affordable Health Care, cautions that there was a crucial aspect of Maine's invisible high-risk pool that fueled its success: It was well-funded. The version proposed in the House GOP health bill, he says, is not.

"An analysis that was done on what this program would need showed that it would need $15 billion to $20 billion per year to have any kind of reasonable impact on premiums," Butterfield says.

The GOP bill does allocate about $15 billion to $20 billion — but that is for almost a full decade, not per year.

"One of our concerns," Butterfield says, "is if the feds are going to put this in place and only kick in a token amount of money, is it going to be up to the states to pick up the slack — pick up the tab, and pay into this thing to make it work?"

Furthermore, Butterfield says, as the law stands now, under the Affordable Care Act, there's no need for high-risk pools of any sort. The idea to use invisible high-risk pools is a solution to a problem that the GOP health care bill creates. Right now people can buy insurance regardless of their health status, whether or not they have a pre-existing condition. It's the GOP bill that would allow states to opt out of that Obamacare rule.

"I don't understand," Butterfield says, "why it would be a good idea to, on the one hand, say, 'Well, we're worried about pre-existing conditions, so we're going to throw not enough money at a problem we're creating. At the same time, we're going to allow insurance companies to charge sick people more.' "

And the invisible high-risk pool, says Stein, is just one small proposal within the larger health bill.

"There's nothing inherently wrong with it," Stein says, "but it doesn't really fix all the other problems of the bill."

Those, he says, include cuts to Medicaid, and potential changes to what have been, under Obamacare, a guaranteed set of essential benefits.

This story is part of NPR's reporting partnership with local member stations and Kaiser Health News.

Tomorrow the Congressional Budget Office releases its analysis of the health care bill that passed the House last month. We'll have a better idea of what it would cost. One of the big sticking points of the bill was how to provide affordable coverage to people with pre-existing conditions. An amendment allocated $15 billion to fund something called an invisible high-risk pool. It's an idea Republicans borrowed in part from Maine. Patty Wight from Maine Public Radio explains how it worked.

PATTY WIGHT, BYLINE: It was called invisible because people in Maine didn't even know if they were in it. When they applied for health insurance, they had to fill out a questionnaire about their health. If they had certain medical conditions, they were placed into a high-risk pool, a group of consumers with more expensive health costs. But Maine consumers didn't know if they were in this pool because their policy and premiums didn't increase. The cost of their more expensive health bills, says independent consultant Mitchell Stein, were paid by a nonprofit entity set up by the state.

MITCHELL STEIN: The act of paying the claims would be taken over by MGARA.

WIGHT: MGARA - the Maine Guaranteed Access Free Insurance Association. It paid claims for these high-cost patients from a pot of money that came from two places - the premiums within that high risk pool and a $4-a-month surcharge on all policyholders in the state. It was just one part of a larger health reform law in Maine which makes a straight-up assessment difficult, says Stein. But...

STEIN: The invisible high-risk pool is a great theory and can be an appropriate way to handle these things. And Maine's Bureau of Insurance superintendent, Eric Cioppa, agrees.

ERIC CIOPPA: Well, in Maine, you know, for the period of time it was operating, it worked very well.

WIGHT: The program started in 2012 and was suspended in 2014 when the Affordable Care Act's marketplaces started. Even though it was brief, Cioppa says the invisible high-risk pool did keep costs down in the individual market where Anthem was the largest insurer.

CIOPPA: When Anthem filed their rates for the product, they had to indicate what the rate would be without the invisible high-risk pool or MGARA and what the rate would be when they reflect the benefits, i.e. the subsidy.

WIGHT: Without the invisible high-risk pool, Cioppa says Anthem would have increased rates more than 20 percent. Instead they increased less than 2 percent. But one critical component of Maine's invisible high-risk pool, says Steve Butterfield of the Maine-based advocacy group Consumers for Affordable Health Care, is that it was well-funded. The Republican health care bill, he says, is not.

STEVE BUTTERFIELD: And an analysis that was done on what this program would need showed that it would need $15 to $20 billion per year to have any kind of reasonable impact on premiums.

WIGHT: Fifteen to 20 billion per year. The GOP bill allocates about that amount of money but to be used over a decade.

BUTTERFIELD: One of our concerns is if the feds are going to put this in place and only kick in, you know, a token amount of money, is it going to be up to the states, you know, to pick up the tab to make it work?

WIGHT: Furthermore, Butterfield says right now there's no need for them. The idea to use invisible high-risk pools solves a problem that the GOP health care bill creates in the first place. Right now, people can get insurance regardless of health status, whether or not they have a pre-existing condition. It's the legislation that allows states to opt out of that Affordable Care Act rule.

BUTTERFIELD: I don't understand why it would be a good idea to on the one hand say, well, we're worried about pre-existing conditions, so we're going to throw not enough money at a problem that we're creating at the same time that we're going to let insurance companies charge sick people more.

WIGHT: And the invisible high-risk pool, says consultant Mitchell Stein, is just one small proposal within the larger health bill.

STEIN: There's nothing inherently wrong with it, but it doesn't really fix all of the other problems in the bill.

WIGHT: Which, Stein says, include potential changes to a guaranteed set of benefits and cuts to Medicaid. For NPR News, I'm Patty Wight in Portland, Maine.

(SOUNDBITE OF MR. GREEN AND MALIK B SONG, "WHAT CAN I SAY")

CORNISH: This story is part of a reporting partnership of NPR, local public radio stations and Kaiser Health News.